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BlackRock Model Portfolios FA Presentation The information shown does not constitute investment advice, does not consider the investment objectives, risk.

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Presentation on theme: "BlackRock Model Portfolios FA Presentation The information shown does not constitute investment advice, does not consider the investment objectives, risk."— Presentation transcript:

1 BlackRock Model Portfolios FA Presentation The information shown does not constitute investment advice, does not consider the investment objectives, risk tolerance or financial circumstances of any specific investor and cannot be shown to current or prospective investors or clients. The information shown does not supplant the obligation of a Financial Advisor to interpose its own best judgment in making investment decisions or investment recommendations for its clients. Before making an investment decision or recommendation for any of its clients, the Financial Advisor should have a reasonable basis for any such decision or recommendation without having relied on information from BlackRock and should take into account the client’s circumstances, objectives and risk tolerance to ensure the security or other investment is suitable for the client. BlackRock is not, and will not be, responsible for the accuracy, completeness, or use of any information provided herein, and BlackRock does not make any warranty, express or implied, concerning such information. BlackRock is not acting as an investment adviser or fiduciary to the Financial Advisor or its clients in connection with the provision of the information contained herein or the investment by such clients in any fund identified herein. Financial Advisors should not state or imply that BlackRock has made or endorsed any investment decision or recommendation, whether on specific funds or other investments or on a client’s portfolio as a whole, or otherwise has any relationship or obligations to any of the Financial Advisor’s clients. FOR FINANCIAL PROFESSIONAL USE ONLY - NOT FOR PUBLIC DISTRIBUTION.

2 Trend Towards FA-Driven Advisory FOR FINANCIAL PROFESSIONAL USE ONLY - NOT FOR PUBLIC DISTRIBUTION. 2 Trend: “Rep-as-Portfolio Manager” and “Rep-as-Advisor” are the fastest growing advisory platforms 38% 2-year growth rate) Implications: Important changes in FA buying behavior: FA’s manage model portfolios Increased use of ETFs alongside mutual funds Increased Tactical Asset Allocation FAs seek asset allocation guidance

3 Portfolio Implementation is Challenging FAs need two things to succeed FOR FINANCIAL PROFESSIONAL USE ONLY - NOT FOR PUBLIC DISTRIBUTION. 3  Carefully managed  Risk managed  Focused on client goals  Tactical asset allocation  Scalable and easy to implement  FA is center of value proposition  Keep expenses low for client  No overlay fee Quality investment solutionsScale business 12

4 The BlackRock Advantage BlackRock is uniquely positioned to partner with you to grow your business Introducing BlackRock Model Portfolios FOR FINANCIAL PROFESSIONAL USE ONLY - NOT FOR PUBLIC DISTRIBUTION. 4 What are they? How do I use them? Why BlackRock?  Asset allocation guidance  Combines iShares ETFs with select active mutual funds  Tactically updated  Delivered through an exclusive FA-only web portal  Implemented by FA with no overlay fee*  Supported by our field based wholesalers  ETFs + MFs  Risk management is our core competency  Wholesaler support – partner with you to scale business *Buying or selling shares of iShares Funds will result in brokerage commissions.

5 Subscribe to Models for Tactical Updates Sample screenshots are for illustrative purposes only FOR FINANCIAL PROFESSIONAL USE ONLY - NOT FOR PUBLIC DISTRIBUTION. 5 Step 1: Log In: To gain access to BlackRock Model Portfolios, visit iShares.com/model portfolios Step 2: Subscribe to the Model Portfolios That Interest You Step 3: Follow the Updates

6 Model Portfolios – Income Solutions Target Income Models – Available Active/Index and Index Only Hedged-Risk Income Models – Available Active/Index and Index Only Portfolio I Core Income Portfolio II Moderate Income Portfolio III High Income Portfolio IV Agg. Income Current Yield Objective after Expenses* 2.0% %3.0% %4.0% %5.0% % Volatility-Hedged Income Rising Rates-Hedged Income Inflation-Hedged Income Current Yield Objective after Expenses* 4.0% % *Please see important notes at the end of this presentation FOR FINANCIAL PROFESSIONAL USE ONLY - NOT FOR PUBLIC DISTRIBUTION. 6 Tax Aware Target Income Models – Available Active/Index Portfolio I Tax Aware Core Income Portfolio II Tax Aware Moderate Income Portfolio III Tax Aware High Income Portfolio IV Tax Aware Agg. Income Tax Equivalent Yield Objective After Expenses* 2.0% %3.0% %4.0% %5.0% %

7 Model Portfolios – Tactical & Strategic Solutions FOR FINANCIAL PROFESSIONAL USE ONLY - NOT FOR PUBLIC DISTRIBUTION. 7 Strategic Models – Available Index Only Conservative Moderate Conservative Moderate Moderate Aggressive Aggressive Tactical Equity Model – Available Index Only Tactical Equity

8 BlackRock Model Portfolio Solutions Team Russ Koesterich, CFA Russ is the Global Chief Investment Strategist for BlackRock and the co-head of the BlackRock Model Portfolios Solutions team Daniel Morillo, PhD Daniel is the Global Head of Investment Research and co-head of the Model Portfolio Solutions business. The Model Portfolios are managed by the Blackrock Model Portfolio Solutions team Led by Daniel Morillo and Russ Koesterich The team has nine members, including 7 PhDs and 3 CFA charterholders FOR FINANCIAL PROFESSIONAL USE ONLY - NOT FOR PUBLIC DISTRIBUTION. 8

9 Investment Process: Starts with a Portfolio Goal Four-step Investment Process Target Income Portfolio IV – Aggressive Income 1 ESTABLISH PORTFOLIO GOALS 5% % current yield objective after expenses* 2 DEFINE INVESTMENT UNIVERSE Fixed income only All iShares and BlackRock mutual fund across ̶ Treasuries ̶ Credit 3 MINIMIZE VOLATILITY Attempt to minimize volatility by optimizing across 3 factors: 1.Yield of each ETF / MF 2.Volatility of each ETF / MF 3.Correlations across all ETFs / MFs 4 TACTICALLY RE-ALLOCATE BlackRock tactically re-allocates the model portfolios as market conditions change Subscribers to our service receive exclusive tactical updates from our portfolio managers ̶ Asset Backed Securities ̶ Non-US Government *Please see important notes at the end of this presentation. Investment process represents the current investment process for BlackRock Model Portfolios and is subject to change. FOR FINANCIAL PROFESSIONAL USE ONLY - NOT FOR PUBLIC DISTRIBUTION. 9

10 Target Income Model Portfolio III – High Income FOR FINANCIAL PROFESSIONAL USE ONLY - NOT FOR PUBLIC DISTRIBUTION. 10 As of February 14, Information shown represents the Target Income Model's current asset class breakdown and is subject to change. Asset allocation strategies do not assure profit or protect against loss.*See important notes at the end of this presentation.  7 to 10 Tickers  Targeted exposures  Quarterly tactical updates  50% to 100% annual turnover ETF Mutual Fund Target Income Portfolio III Current yield objective = 4% +/- 0.25%

11 Inflation-Hedged Income Model Portfolio ETF Mutual Fund FOR FINANCIAL PROFESSIONAL USE ONLY - NOT FOR PUBLIC DISTRIBUTION. 11 Inflation-Hedged Income Current yield objective = 4% +/- 0.25% Sector equities that hedge inflation risk…but the trade-off is higher volatility As of February 14, Information shown represents the Target Income Model's current asset class breakdown and is subject to change. Asset allocation strategies do not assure profit or protect against loss.*See important notes at the end of this presentation.

12 Target Income models: Yield vs. Risk Fixed Income portfolios that seek a superior risk-return profile as compared to the Barclays US Aggregate Bond Index. As of February 14, Please see important notes at the end of this presentation. Index returns are for illustrative purposes only. Indexes are unmanaged and one cannot invest directly in an index. Barclays US Aggregate Bond Index Portfolio I Core Income Portfolio II Moderate Income Portfolio III High Income Portfolio IV Aggressive Income FOR FINANCIAL PROFESSIONAL USE ONLY - NOT FOR PUBLIC DISTRIBUTION. 12

13 Risk Analytics FOR FINANCIAL PROFESSIONAL USE ONLY - NOT FOR PUBLIC DISTRIBUTION. 13 BlackRock is a leader in institutional risk management  BlackRock Solutions® provides independent risk management and enterprise investment services for over $13 trillion in assets*  Institutional clients need to understand sources of risk Risk Contribution** Barclays US Aggregate Bond Index Concentrated risk exposure >100% is Rate Risk *Assets as of December 31, 2012 **Please see important notes at the end of this presentation. All figures as of February 14, See Model Portfolios website for most up to date information. Asset allocation strategies do not assure profit and do not protect against losses. It is not possible to invest directly in an index. Portfolio I Core Income Portfolio II Moderate Income Portfolio III High Income Portfolio IV Aggressive Income Barclays US Aggregate Bond Index Total Standard Deviation**1.86%2.83%5.74%6.89% 2.45% Rate Risk Contribution0.67%1.00%3.32%0.70%2.54% Credit Risk Contribution1.04%1.61%1.71%5.40%-0.15% FX Risk Contribution–0.01%0.52%0.58%– Other0.14%0.21%0.18%0.21%0.06%

14 A case study in Active-Index investing Most high yield bonds are illiquid ̶ There are >1800 bonds in Barclays US High Yield Index Active manager can seek alpha via credit research in illiquid securities ETF provides efficient liquid exposure as tactical changes are implement Active–Index: High Yield Case Study BlackRock is a world leader in Active-Index investing ETFs can reduce active risk and lower expense ratios. ETFs are 50% to 70% of the models Mutual funds can add alpha and obtain exposures ETFs cannot BHYIX (MF) BlackRock High Yield Bond Fund 20% strategic allocation HYG (ETF) iShares iBoxx $ High Yield Corporate Bond Fund" 0 to 10% tactical allocation High Yield Fixed IncomePortfolio II - Moderate Income Model 20% 0-10% This information should not be relied upon as research, investment advice or a recommendation regarding any security in particular. This information is subject to change. Please see important notes at the end of this presentation. FOR FINANCIAL PROFESSIONAL USE ONLY - NOT FOR PUBLIC DISTRIBUTION. 14

15 Subscribe to Models for Tactical Updates Sample screenshots are for illustrative purposes only FOR FINANCIAL PROFESSIONAL USE ONLY - NOT FOR PUBLIC DISTRIBUTION. 15 Step 1: Log In: To gain access to BlackRock Model Portfolios, visit iShares.com/model portfolios Step 2: Subscribe to the Model Portfolios That Interest You Step 3: Follow the Updates

16 Capabilities Brochure Resources to Support Your Business Sample screenshots are for illustrative purposes only. FOR FINANCIAL PROFESSIONAL USE ONLY - NOT FOR PUBLIC DISTRIBUTION. 16 Client-Approved Quarterly Tactical Update Weekly Investment Commentary from Russ Koesterich

17 Appendix

18 FOR FINANCIAL PROFESSIONAL USE ONLY - NOT FOR PUBLIC DISTRIBUTION Risk Contribution Factors 18 As of February 14, 2013 Please see important notes at the end of this presentation.

19 FOR FINANCIAL PROFESSIONAL USE ONLY - NOT FOR PUBLIC DISTRIBUTION Betas Barclays Aggregate Bond Index* Portfolio I Core Income Portfolio II Moderate Income Portfolio III High Income Portfolio IV Aggressive Income Beta to 10-Year Treasuries Beta to 2-Year Inflation Expectations Beta to Investment Grade Credit Spreads Beta to S&P 500 Index Beta to USDX (US Dollar Currency Index) As of February 14, 2013 Please see important notes at the end of this presentation.

20 FOR FINANCIAL PROFESSIONAL USE ONLY - NOT FOR PUBLIC DISTRIBUTION Beta to 10-year Treasury Rate Barclays Aggregate Bond Index Portfolio I Core Income Portfolio II Moderate Income Portfolio III High Income Portfolio IV Aggressive Income 20 As of February 14, 2013 Please see important notes at the end of this presentation.

21 FOR FINANCIAL PROFESSIONAL USE ONLY - NOT FOR PUBLIC DISTRIBUTION Beta to Investment Grade Credit Spreads  There’s no “free lunch”  Risk management does not mean avoiding risk  It means understanding the risks you are taking and consciously making those trade-offs Barclays Aggregate Bond Index Portfolio I Core Income Portfolio II Moderate Income Portfolio III High Income Portfolio IV Aggressive Income 21 As of February 14, 2013 Please see important notes at the end of this presentation.

22 Standardized Performance of Underlying Holdings Target Income Model Portfolios (3/31/13) FOR FINANCIAL PROFESSIONAL USE ONLY - NOT FOR PUBLIC DISTRIBUTION. 22 TickerMutual Fund/ETF Inception Date 30 Day SEC Yield Expense Ratio 1 Year Returns 5 Year Returns 10 Year Returns Since Inception NAV Market Price NAV Market Price NAV Market Price NAV Market Price CLY iShares 10+ Year Credit Bond Fund12/8/ %0.20%9.28%9.39% %10.58% CSJ iShares Barclays 1-3 Year Credit Bond Fund1/5/ %0.20%2.06%1.98%3.36%3.22%--3.91%3.90% EMHY iShares Emerging Markets High Yield Bond Fund 4/3/ %0.65% %14.05% HYG iShares iBoxx $ High Yield Corporate Bond Fund 4/4/ %0.50%11.35%11.14%8.76%8.32%--6.89%6.84% LEMB iShares Emerging Markets Local Currency Bond Fund 10/18/ %0.60%7.13%6.11% %8.21% MBB iShares Barclays MBS Bond Fund3/13/ %0.26%1.82%1.70%4.78%4.75%--5.10%5.09% LQD iShares iBoxx $ Investment Grade Corporate Bond Fund 7/22/ %0.15%7.83%7.73%8.07%7.69%5.94%5.92%6.50% QLTC iShares B - Ca Rated Corporate Bond Fund4/24/ %0.55% %11.21% SHY iShares Barclays 1-3 Year Treasury Bond Fund 7/22/ %0.15%0.49%0.53%1.60%1.59%2.56%2.55%2.66% IEI iShares Barclays 3-7 Year Treasury Bond Fund 1/5/ %0.15%2.79% 4.39%4.38%--5.95% IEF iShares Barclays 7-10 Year Treasury Bond Fund 7/22/ %0.15%5.76%5.74%6.41%6.39%5.87%5.86%6.25% TLT iShares Barclays 20+ Year Treasury Bond Fund 7/22/ %0.15%7.47%7.74%8.19%8.10%7.32%7.29%7.82% BFRIX BlackRock Floating Rate Income Fund3/18/ %0.81%7.21%-5.57%-5.37%--- BGNIX BlackRock GNMA Fund5/18/ %0.82%3.00%-6.00%-5.34%-5.99%- BHYIX BlackRock High Yield Bond Fund11/19/ %0.64%13.82%-11.25%-10.11%-8.17%- The performance quoted represents past performance and does not guarantee future results. Investment return and principal value of an investment will fluctuate so that an investor’s shares, when sold or redeemed, may be worth more or less than the original cost. Current performance may be lower or higher than the performance quoted. Performance data current to the most recent month end may be obtained by visiting or Shares of iShares Funds are bought and sold at market price (not NAV) and are not individually redeemed from the Fund. Brokerage commissions will reduce returns. Market returns are based upon the midpoint of the bid/ask spread at 4:00 p.m. eastern time (when NAV is normally determined for most iShares Funds), and do not represent the returns you would receive if you traded shares at other times.www.iShares.comwww.blackrock.com

23 Standardized Performance of Underlying Holdings Tax-Aware Target Income Model Portfolios (3/31/13) FOR FINANCIAL PROFESSIONAL USE ONLY - NOT FOR PUBLIC DISTRIBUTION. 23 TickerMutual Fund/ETF Inception Date 30 Day SEC Yield Tax Equivalent 30 Day SEC Yield Expense Ratio 1 Year Returns5 Year Returns10 Year ReturnsSince Inception NAV Market Price NAV Market Price NAV Market Price NAV Market Price BGNIX BlackRock GNMA Fund5/18/ %2.74%0.82%3.00%-6.00%-5.34%-5.99%- BHYIX BlackRock High Yield Bond Fund11/19/ %9.54%0.64%13.82%-11.25%-10.11%-8.17%- BFRIX BlackRock Floating Rate Income Fund3/18/ %8.22%0.81%7.21%-5.57%-5.37%--- HYG iShares iBoxx $ High Yield Corporate Bond Fund 4/4/ %8.64%0.50%11.35%11.14%8.76%8.32%--6.89%6.84% MALMX BlackRock Short-Term Municipal Fund11/2/ %0.19%0.50%0.67%-1.85%-2.08%-4.40%- MANLX BlackRock National Municipal Fund11/2/ %4.63%0.71%6.80%-6.76%-5.48%-7.53%- MAYHX BlackRock High Yield Municipal Fund8/1/ %7.07%0.80%10.76%-7.58% %- MBB iShares Barclays MBS Bond Fund3/13/ %5.21%0.26%1.82%1.70%4.78%4.75%--5.10%5.09% MUB iShares S&P National AMT-Free Municipal Bond Fund 9/7/ %2.99%0.25%4.63%3.52%5.67%5.48%--5.25%5.19% SHY iShares Barclays 1-3 Year Treasury Bond Fund 7/22/ %0.21%0.15%0.49%0.53%1.60%1.59%2.56%2.55%2.66% SUB iShares S&P Short Term National AMT-Free Municipal Bond Fund 11/5/ %0.41%0.25%0.95%0.71% % The performance quoted represents past performance and does not guarantee future results. Investment return and principal value of an investment will fluctuate so that an investor’s shares, when sold or redeemed, may be worth more or less than the original cost. Current performance may be lower or higher than the performance quoted. Performance data current to the most recent month end may be obtained by visiting or Shares of iShares Funds are bought and sold at market price (not NAV) and are not individually redeemed from the Fund. Brokerage commissions will reduce returns. Market returns are based upon the midpoint of the bid/ask spread at 4:00 p.m. eastern time (when NAV is normally determined for most iShares Funds), and do not represent the returns you would receive if you traded shares at other times.www.iShares.comwww.blackrock.com

24 Standardized Performance of Underlying Holdings Hedged-Risk Income Model Portfolios (3/31/13) FOR FINANCIAL PROFESSIONAL USE ONLY - NOT FOR PUBLIC DISTRIBUTION. 24 TickerMutual Fund/ETF Inception Date 30 Day SEC Yield Expense Ratio 1 Year Returns5 Year Returns10 Year ReturnsSince Inception NAV Market Price NAV Market Price NAV Market Price NAV Market Price CLY iShares 10+ Year Credit Bond Fund12/8/ %0.20%9.28%9.39% %10.58% CSJ iShares Barclays 1-3 Year Credit Bond Fund1/5/ %0.20%2.06%1.98%3.36%3.22%--3.91%3.90% HYG iShares iBoxx $ High Yield Corporate Bond Fund 4/4/ %0.50%11.35%11.14%8.76%8.32%--6.89%6.84% IDV iShares Dow Jones International Select Dividend Index Fund 6/11/ %0.50%10.48%10.34%1.00%1.20% %-1.06% IGF iShares S&P Global Infrastructure Index Fund12/10/ %0.48%9.36%9.42%0.02%0.01% %-1.96% IXC iShares S&P Global Energy Sector Index Fund 11/12/ %0.48%3.16%3.00%0.67%0.70%12.52%12.47%10.05% IXP iShares S&P Global Telecommunications Sector Index Fund 11/12/ %0.48%11.58%11.20%2.43%2.46%9.56%9.46%4.61% JXI iShares S&P Global Utilities Sector Index Fund 9/12/ %0.48%5.97%5.50%-3.31%-3.36%--1.30%1.28% LEMB iShares Emerging Markets Local Currency Bond Fund 10/18/ %0.60%7.13%6.11% %8.21% LQD iShares iBoxx $ Investment Grade Corporate Bond Fund 7/22/ %0.15%7.83%7.73%8.07%7.69%5.94%5.92%6.50% MBB iShares Barclays MBS Bond Fund3/13/ %0.26%1.82%1.70%4.78%4.75%--5.10%5.09% OEF iShares S&P 100 Index Fund10/23/ %0.20%12.41%12.36%5.15%5.06%7.29% 1.61% PFF iShares S&P U.S. Preferred Stock Index Fund 3/26/ %0.48%10.29%10.22%6.85%6.47%--3.86%3.87% TLT iShares Barclays 20+ Year Treasury Bond Fund 7/22/ %0.15%7.47%7.74%8.19%8.10%7.32%7.29%7.82% BFRIX BlackRock Floating Rate Income Fund3/18/ %0.81%7.21%-5.57%-5.37%--- BGNIX BlackRock GNMA Fund5/18/ %0.82%3.00%-6.00%-5.34%-5.99%- BHYIX BlackRock High Yield Bond Fund11/19/ %0.64%13.82%-11.25%-10.11%-8.17%- BPRIX BlackRock Inflation Protected Bond Fund6/28/ %0.57%5.24%-5.79% %- MADVX BlackRock Equity Dividend Fund11/29/ %0.72%12.59%-5.30%-10.77%-9.89%- The performance quoted represents past performance and does not guarantee future results. Investment return and principal value of an investment will fluctuate so that an investor’s shares, when sold or redeemed, may be worth more or less than the original cost. Current performance may be lower or higher than the performance quoted. Performance data current to the most recent month end may be obtained by visiting or Shares of iShares Funds are bought and sold at market price (not NAV) and are not individually redeemed from the Fund. Brokerage commissions will reduce returns. Market returns are based upon the midpoint of the bid/ask spread at 4:00 p.m. eastern time (when NAV is normally determined for most iShares Funds), and do not represent the returns you would receive if you traded shares at other times.www.iShares.comwww.blackrock.com

25 Important Notes This information should not be relied upon as investment advice, research, or a recommendation by BlackRock regarding (i) the iShares Funds, (ii) the use or suitability of the model portfolios or (iii) any security in particular. Only an investor and their financial advisor know enough about their circumstances to make an investment decision. The model portfolios, allocations and data are subject to change. Data shown is for informational purposes only, does not represent an actual account, and is not the result of any actual trading. Actual investment outcomes may vary. The financial professional assumes full responsibility in determining the suitability and fitness of each fund, other security, account or model chosen by the financial professional. Information on previous allocations and model changes is available upon request. Current Yield Objective: While each current yield objective was determined with reference to the current yields of the underlying funds, it is specific to each model and is not a prediction of fund or model yield or reflective of actual results. Realized yields will vary and may be lower. Past performance is not predictive of future results. Standard Deviation: Standard deviation for the model portfolio is a statistical estimate measuring how dispersed returns are around an average. Standard deviation is estimated using the risk factor exposures and volatilities of the underlying funds, based on BlackRock Solutions multi-asset class risk models, and takes into account the correlations of these factors across the portfolio. Standard deviation is not meant to be a prediction of fund or model volatility and actual volatility of any portfolio based in whole or in part on the models shown will vary and may be higher. Risk Component Contribution: Contribution to risk measures the historical changes to risk associated with changes in a particular risk factor. Time period used was 5/31/08 to 02/14/13. For funds launched after 5/31/08, time period used was since inception to 02/14/13. Risk contributions are designed to sum to equal the total volatility of the portfolio. Past performance does not guarantee future results. Risk contribution factors here are: Total standard deviation of the portfolio is the sum of the risk contributions across rate, credit, FX and other risk. Rate risk contributions, which capture volatility associated with portfolio covariation with benchmark government interest rates. Credit risk contributions, which capture volatility associated with portfolio covariation with investment grade, high yield and distressed debt credit spreads over benchmark interest rates. FX risk contributions, which capture volatility associated with portfolio covariation with foreign exchange rate fluctuations. Other risk contributions capture the remaining portion of volatility that is idiosyncratic relative to Rate, Credit and FX risk. Beta: The Beta of a portfolio is a number describing the historical volatility of that portfolio in relation to the volatility of a selected benchmark. Time period used was 5/31/08 to 02/14/13. For funds launched after 5/31/08, time period used was since inception to 02/14/13. A positive beta indicates a tendency for there to be co-movement with the benchmark, while a negative beta indicates that the portfolio and the benchmark tend to move in opposite directions. For example then, a beta of +2 would indicate that for a given percentage change in the benchmark, the change in the value of the portfolio has historically tended to be twice that. Past performance does not guarantee future results. The Beta to the S&P 500 Index measures the portfolio’s sensitivity to changes in the value of the S&P 500 index. The Beta to 10-year Treasury Interest Rate measures the portfolio’s sensitivity to changes in the 10-year maturity US Treasury bond interest rate. The Beta to 2-Year Inflation Expectations measures the portfolio’s sensitivity to changes in the market interest rate spread between 2-year US Treasuries and the 2-year US Treasury Inflation Protected Security. The Beta to Investment Grade Spreads measures the portfolio’s sensitivity to changes in the credit spread of a diversified US investment grade bond index, as measured by the J.P. Morgan US Liquid Index. The Beta to USDX (US Dollar Currency Index) measures the portfolio’s sensitivity to changes in the value of the US Dollar Index, which measures the average change in value of the USD versus major world currencies. FOR FINANCIAL PROFESSIONAL USE ONLY - NOT FOR PUBLIC DISTRIBUTION. 25

26 Carefully consider the Funds’ investment objectives, risk factors, and charges and expenses before investing. This and other information can be found in the Funds’ prospectuses, and if available, the summary prospectuses which may be obtained by visiting or Read the prospectus carefully before investing. Investing involves risk, including possible loss of principal. Asset allocation and diversification may not protect against market risk, loss of principal or volatility of returns. Bonds and bond funds will decrease in value as interest rates rise and are subject to credit risk, which refers to the possibility that the debt issuers may not be able to make principal and interest payments or may have their debt downgraded by ratings agencies. An investment in the Funds is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Important Notes FOR FINANCIAL PROFESSIONAL USE ONLY - NOT FOR PUBLIC DISTRIBUTION. 26

27 The information provided is not intended to be a complete analysis of every material fact respecting any strategy and has been presented for educational purposes only. Asset allocation models and diversification do not promise any level of performance, guarantee against loss of principal or protect against volatility of returns. Shares of iShares Funds are bought and sold at market price (not NAV) and are not individually redeemed from the Fund. There can be no assurance that an active trading market for shares of an ETF will develop or be maintained. Mutual funds and iShares Funds are obliged to distribute portfolio gains to shareholders by year-end. These gains may be generated due to index rebalancing or to meet diversification requirements. Trading shares of the iShares Funds will also generate tax consequences and transaction expenses. Certain traditional mutual funds can be tax efficient as well. When comparing stocks or bonds and iShares Funds, it should be remembered that management fees associated with fund investments, like iShares Funds, are not borne by investors in individual stocks or bonds. The annual management fees of iShares Funds may be substantially less than those of most mutual funds. Buying and selling shares of iShares Funds will result in brokerage commissions, but the savings from lower annual fees can help offset these costs. Index returns are for illustrative purposes only and do not represent actual iShares Fund performance. Index performance returns do not reflect any management fees, transaction costs or expenses. Indexes are unmanaged and one cannot invest directly in an index. Past performance does not guarantee future results. BlackRock does not provide tax advice. Please note that (i) any discussion of U.S. tax matters contained in this communication cannot be used by you for the purpose of avoiding tax penalties; (ii) this communication was written to support the promotion or marketing of the matters addressed herein; and (iii) you should seek advice based on your particular circumstances from an independent tax advisor. Important Notes FOR FINANCIAL PROFESSIONAL USE ONLY - NOT FOR PUBLIC DISTRIBUTION. 27

28 Important Notes The iShares Funds and BlackRock Mutual Funds are distributed by BlackRock Investments, LLC (together with its affiliates, “BlackRock”). The iShares Funds are not sponsored, endorsed, issued, sold or promoted by Cohen & Steers Capital Management, Inc., European Public Real Estate Association (“EPRA ® ”), FTSE International Limited (“FTSE”), JPMorgan Chase & Co., MSCI Inc., Markit Indices Limited, Morningstar, Inc., The NASDAQ OMX Group, Inc., National Association of Real Estate Investment Trusts (“NAREIT”), New York Stock Exchange, Inc., Russell Investment Group or S&P Dow Jones Indices LLC, nor are they sponsored, endorsed or issued by Barclays Capital Inc. None of these companies make any representation regarding the advisability of investing in the Funds. BlackRock is not affiliated with the companies listed above. Neither FTSE nor NAREIT makes any warranty regarding the FTSE NAREIT Real Estate 50/Residential/ Retail/Mortgage or Industrial/Office Index; all rights vest in NAREIT. Neither FTSE nor NAREIT makes any warranty regarding the FTSE EPRA/NAREIT Developed Real Estate ex-US/North America/Europe/Asia Index; all rights vest in FTSE, NAREIT and EPRA. All rights in the FTSE Developed Small Cap ex-North America Index vest in FTSE. “FTSE ® ” is a trademark jointly owned by the London Stock Exchange Plc and The Financial Times Limited and is used by FTSE under license. ©2013 BlackRock. All rights reserved. ISHARES and BLACKROCK are registered trademarks of BlackRock. All other marks are the property of their respective owners. iS Not FDIC Insured No Bank Guarantee May Lose Value FOR FINANCIAL PROFESSIONAL USE ONLY - NOT FOR PUBLIC DISTRIBUTION. 28


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